You Are Comparing Two Investment Options,each of Which Will Provide

question 69

Multiple Choice

You are comparing two investment options,each of which will provide $15,000 of total income.Option A pays five annual payments starting with $5,000 the first year followed by four annual payments of $2,500 each.Option B pays five annual payments of $3,000 each.Which one of the following statements is correct given these two investment options?

• A)Both options are of equal value today.
• B)Given a positive rate of return,Option A is worth more today than Option B.
• C)Option B has a higher present value than Option A given a positive rate of return.
• D)Option B has a lower present value than Option A given a zero rate of return.
• E)Option A is preferable because it is an annuity due.

Determine the risk premiums on factor portfolios according to multifactor models.

Understand the historical and legal context of consumer protection before the 1960s including "caveat emptor."

Recognize the importance of copyrights, trademarks, and patents as forms of intellectual property.

Describe the role of culture, societal norms, and ethics in shaping business practices.

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Definitions:

Independent Variables

Factors that are manipulated or changed in an experiment to determine their effect on dependent variables.

Multiple Coefficient

Often refers to the coefficient of determination (R^2) in multiple regression analysis, indicating the proportion of variance in the dependent variable predictable from the independent variables.

Determination

The process of finding out or calculating something, often used in the context of deducing values in statistical analysis.

SSR

The sum of squared deviations of predicted values from the mean of observed values in a regression analysis; a measure of the variation explained by the regression model.